The Fair Work Commission (FWC) has warned that employees cannot be compelled to sign a new employment contract after a worker was found to have been unfairly dismissed for not agreeing to a new contract with a higher sales target and stricter post-employment restraints.
The business development manager successfully dismissed his former employer's jurisdictional objections and has been awarded compensation for their dismissal, which the FWC found unfair.
Background
Employed for over nine years with no performance or conduct issues, the dispute developed after the employee was presented with a new job description and contract due to a transfer of employees to another entity, which included a higher sales target, non-solicitation and post-termination restraint clauses. Concerned about the scope of the restraint clauses, the employee sought amendments to be made before they would sign the contract.
During some back-and-forth between the employee and their employer over the new contract, the employee received a letter to attend a meeting regarding a performance review where the employee was notified that if they did not sign the contract of employment, the employer would consider that to be a resignation bringing the employment to an end.
The employee reiterated their concerns, confirming they were not resigning but wished to remain employed under their current written contract.
After not receiving a response, the employee followed up stating they considered themselves dismissed by the company by way of repudiation of the employment contract and relationship.
Refusing a new contract is not grounds for dismissal
Heard before the FWC, the employer argued the worker had not been dismissed but resigned from their employment as a result of not accepting the new contract.
However, Deputy President Masson rejected the argument stating the documents and other evidence submitted "reveals a campaign of pressure being applied to the Applicant and his colleagues to sign the proposed new contract of employment."
Against the "background of pressure" and "clear unwillingness of the Respondent to address the Applicant's contract concerns", Deputy President Masson dismissed the Respondent's claim that "it was flexible and prepared to amend the proposed contract of employment" as simply not believable.
"It is apparent that the Respondent wanted the Applicant to sign the new contract of employment and placed considerable pressure on him to do so."
Finding a "lack of a credible motive for the Applicant to resign in circumstances of having worked for the Respondent for over nine years and with no alternative role to move to outside the organisation", Deputy President Masson was satisfied the employee did not resign but rather "it was the actions of the Respondent that resulted in the termination of employment".
The FWC ruled in favour of the employee awarding compensation equivalent to 19 weeks' pay, plus superannuation.
Implications
This decision from the Fair Work Commission is a significant reminder to employers that employees cannot be coerced or unduly influenced to sign a new or amended contract. Any proposed changes must be agreed on by both parties.
Some employment contracts contain clauses that permit an employer to make changes to an employee's working conditions without agreement, for example, to their hours of work or duties they perform. However, if you have been supplied with a new employment contract and you are not happy with the terms, your employer cannot:
- unreasonably change the terms of your employment contract without informing you and obtaining your consent to do so;
- compel you to sign a new employment contract; or
- punish you for failing to sign a new employment contract.
If your employer coerces or influences you into signing a new contract by threatening you with termination, demotion or a change to your employment status, you can make a claim to the Fair Work Commission. The best place to start is by speaking to an experienced employment lawyer to understand your rights and how best to proceed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
